Japan’s current account surplus sets 10-year high in first half of 2017

The current account surplus expanded in the January-June period to its highest level since 2007 as earnings from foreign investments moved further into the black offset a rise in energy prices that made imports more expensive, government data showed Tuesday.

Marking the largest figure since the 2008 financial crisis, the surplus came to ¥10.51 trillion in the six months through June, up 0.3 percent from a year earlier, the Finance Ministry said in its preliminary report.

The current account balance is one of the widest gauges of international trade for a nation. The latest surplus was the largest for a half-year period since the ¥12.25 trillion logged through the second half of 2007.

The surplus in the primary income account, which reflects how much Japan earns from its foreign investments, rose 2.2 percent to ¥9.76 trillion, helped by the yen’s depreciation against the dollar.

Japan’s trade surplus, however, narrowed 11.7 percent to ¥2.05 trillion, squeezed by rising crude oil prices at a time when robust exports of semiconductor equipment and auto parts lifted the trade-reliant economy.

According to the latest data, imports jumped 11.8 percent to ¥35.25 trillion while exports gained 10.1 percent to ¥37.31 trillion in value terms.

Japan relies heavily on energy imports, especially since the March 2011 Fukushima nuclear disaster resulted in all of the country’s nuclear power reactors being taken offline.

Imports of crude oil, coal and liquefied natural gas all surged by double digits on a year-on-year basis. Crude oil prices averaged $54.23 a barrel, marking a 47.7 percent gain from a year earlier.

The travel surplus expanded to ¥790.3 billion, the highest on record for the first-half period, from ¥727.7 billion a year ago, as Japan continued to benefit from a surge in foreign visitors.

“The pace of growth in exports may slow going forward after a strong run,” said Yuichiro Nagai, an economist at Barclays Securities Japan Ltd.

“Still, the primary income surplus is expected to stay at high levels (to support the current account surplus),” Nagai said, noting that Japanese companies, with abundant cash on hand, have been moving toward mergers and acquisitions overseas.

The service sector, including passenger transportation and cargo shipping, reported a deficit of ¥297.4 billion.

Looking at June alone, Japan ran a current account surplus for the 36th straight month, with the balance standing at ¥934.6 billion. The goods trade surplus came to ¥518.5 billion, according to the Finance Ministry data.

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